Japan Facing Debt Default Risk

Japan Facing Debt Default Risk



The risk sentiment was mixed on the Asian trading session, amid Japanese Economy Minister Amari said that the nation faces risks from the excessive Yen decline, and Fujimaki warned of a debt default within five years to weaken the Yen up to 400-500 Yen vs. USD. Fujimaki stated 'Large-scale spending is ridiculous given the amount of debt Japan has accumulated' and added that 'Abe's policies would have worked some 10 years ago, but now they will only accelerate an economic collapse'. Japan also released y/y M2 and M3 stocks, higher than the expectations (M2 y/y actual 2.6%, vs. 2.1% exp. & prior, M3 y/y actual 2.2%, vs. 1.9% exp. & prior).

In reaction, USDJPY collapsed to 88.63 (nearly 90 pips), before then consolidating gains from last Friday (Jan 11th), while EURJPY and GBPJPY slipped down to 118.39 and 142.480 respectively. The Nikkei 225 advanced 0.72% and Shanghai's composite added 0.56% (failing to seriously extend yesterday's upwards surge), Hang Seng index lost 0.56%, while Kospi and Taiex fell by 1.16% and 0.75%.